Table of Contents. Academic Assist

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1 Identify and critically analyse a key organisational behavioural and/or human resource issue facing an organisation of your choice. Discuss what you consider to be the appropriate management responses to this issue. 1

2 Table of Contents 1.Introduction... Error! Bookmark not defined. 1.1 About Nokia Organization Structure of Nokia Mission Statement and Values of Nokia Nokia HR Practices Human Resource Issue in Nokia Organizational Structure Contribution and Application of Behavioural Science Theory Integration of organisational behaviour and management practice and their impact on organisational outcomes HRM and Performance Added Value of HRM Establishing HR Activities Conclusion Bibliography

3 1. Introduction The main purpose of this report is to find and then critically analyse a key organizational behavioural or human resource issue which is being faced by Nokia. After analysing we will find out appropriate management response to the issue. 1.1 About Nokia Nokia is the global master in the field of telecommunication devices market and has been ruling the roost since 1990 s. Being a global mobile device giant, it also turned out to be the biggest camera manufacturer and it also aims at becoming the biggest portable music device maker also. Nokia has always been an essential part of Finland s economy as it has higher net sales than the whole years budget of Finland (Chanda 2007). Like in year 2007 the net sales of Nokia was 51,058 million Euros while the yearly budget of Nokia was approximately 40,482 million Euros in 2007 (Kloeg 2007). Nokia has also been listed as the 69 th biggest public company in the very recent Forbes list in 2007 (Gupta 2012). Nokia was founded in 1865 as a paper mill by Fredrik Idestam on the banks of river Nokianvirta in Finland. In the year 1937 it merged with a cable company, thus entering the communication sector. The punch line Connecting People indicates how it has invented various mobile communication models and changed the way of communication. 1.2 Organization Structure of Nokia The organization structure of Nokia mainly comprises of Services & Software, markets, Devices and Corporate Development Office as can be seen from Figure 1 shown below: 3

4 GROUP EXECUTIVE BOARD SERVICES & SOFTWARE MARKETS Nokia Siemens Network DEVICES NAVTEQ CORPORATE DEVELOPMENT OFFICE CORPORATE FUNCTIONS Figure 1: Nokia Organization Chart 1.3 Mission Statement and Values of Nokia Mission To bring out the best of abilities as well as skills of men as well as women from various cultural backgrounds or lifestyles so as to bring success to Nokia. Nokia Values Diversity (Different People + Different Ideas) = Nokia s Success Nokia is highly committed towards diversity and this commitment towards cultural diversity lies at the heart of the ways and values of Nokia. It tries to offer equal opportunities to its employees to grow; therefore Nokia promotes inclusiveness towards every employee. It tries to seek benefit as well as respect form cultural differences (Spicer, 2013). 4

5 1.4 Nokia HR Practices Nokia follows the Nokia Way which lays down particular rules to be followed and also forms the common basis for formation of bonds which are common amongst the employees as well as creates shared philosophies. Selective recruitment as well as selection, employee involvement, compensation, along with employee training and development is some of the major HR Principles or practices which are adopted in the organization so as to achieve the organizational goals (Haikio, 2002). The applicants are being chosen or selection is done on the basis of their skills along with their knowledge base in connection with the technical requirements of the job. The applicants are selected on the basis of person-job fit criterion. Along with this they are also selected on the basis of the fit existing between the applicant and the Nokia culture that is on the basis of person-organization fit. Some of the key issues which arise during the recruitment and the selection process are inclusion of minority issues along with Diversity Management. It is a common corporate belief that a diverse workforce which consists of different people of varied nationalities, men and women and different ethnic minorities helps in achieving innovation, creativity as well as success. Training as well as development is being facilitated within the organization through the intranet utilising the elearning opportunities as well as personal coaching s which is being provided by more experienced Nokia employees (Mimoun 2007). The employees get access to promotion opportunities which are available online through internal job market on intranet. 2. Human Resource Issue in Nokia Nokia being the leading mobile and Telecommunication Company in the industry has to face major challenges and has to look for new opportunities due to high level of growth and attention in the network and mobile industry (Haiko 2002; Meriden 2001). The 20 th global rank given by Fortune and its excellent financial performance as well as market shares 5

6 reflects its success. Nokia is totally technology driven organization and the Nokia culture is fully connected and assimilated with information technology and networks. The corporate philosophy of Nokia is also mainly found to be focussed on The Nokia Way. The Nokia Way reflects equality amongst employees, being open to people as well as sharing new ideas. There are specific HRM practices which are being adopted at Nokia. These practices mainly focus upon attracting as well as retaining good employees. The Nokia HR practices mainly cover techniques like selective recruitment as well as election, internal promotion opportunities & career development, pay for performance, extensive development of employees and employee involvement in decision making process (Thomas 2008). Empirical research has shown that such practices are very helpful in enhancing organizational commitment, employee presence or observe of absenteeism, employee satisfaction, loyalty as well as employee retention (Boselie et al. 2005). Therefore in other words it can be simply said that good people management at Nokia led to success of Nokia. But the main human resource issue which arises over here is that how does massive layoffs and reorganizations taking place in Nokia for example the one which occurred in spring 2003 is managed by the organization and how does it impact the employees behaviour as well as attitude? Another critical human resource or organizational behavioural issue which Nokia employees have to face is that what kind of perception it creates in the minds of employees about Nokia s HR practices which are mentioned above. Therefore through this report we will try to find out how the HR practices adopted by Nokia help in overcoming the problems which occur due to reorganizations and massive layoffs in the company. Therefore this report will help in finding out that how HRM contributes towards the organizational performance as well as towards general employee well-being in the periods of organizational changes for example downsizing or reorganization within company. Job autonomy, regular feedback sessions, regular employee surveys ( also known as listening to you survey ), self responsibility for personal development, general participation in decision-making along with coaching of fresh employees are some HR practices of Nokia which depict employee involvement at very high level. For all kinds of questions related to personnel management the HR department of Nokia operates an exclusive forum, where they can raise questions being employees of Nokia, this forum is popularly known as asks HR 6

7 feedback channel (Nokia, 2009). The HR department of Nokia gives and also publishes openly all the answers to these questions on intranet. The two main aspects on which the compensation in Nokia is being focussed are: giving financial compensation in terms of stock options, higher salaries or bonuses and secondly offering compensation by creating various possibilities so as to create personal work-life balance which depicts through flexible working environment and arrangements as per the needs and requirements of employees catering to their preferences as well as interests. Therefore in order to motivate the employees at Nokia as part of providing compensation according to preferences and interests of employees the HR department offers practices like teleporting, flexible working hours, sabbaticals, study leaves and mobile working. 3. Organizational Structure Overall the organizational structure of Nokia can be characterised as flat structure and the organizational culture of Nokia is highly impacted by the technological nature or aspect of the business. The HR practices at Nokia are perfectly found to be aligned with the technological environment as well as the Nokia culture. However the major HR issue which is found in the Nokia as organization are the regular reorganizations and layoffs for example in spring 2003 Nokia downsized and cut down 1800 jobs across the organization all over the world so as to be successful through being effective as well as efficient (Daft 2007). During this period the percentage of job loss at Nokia was 10% and there were many court cases which were filed against the company and it also impacted the corporate image of Nokia in negative manner, mainly in the home market of Finland (Kloeg 2007). 4. Contribution and Application of Behavioural Science Theory 7

8 To enable the understanding of the management of organisational behaviour it is imperative to study the behavioural science theory.the study of organization as well as the people working in the organization together constitutes and form organizational behaviour. Therefore organizational; behaviour is considered to be the study of the behaviour of human beings in typical organizational settings, while it acts as an interface between the organization and the human behaviour. Organizational behaviour mainly deals with understanding the attitudes, performances well as behaviour of the people or the employees working with the company (Champoux 2010). Organizational theories on the other hand mainly emphasise on the structure as well as design of the organization. Therefore organizational behaviour can be defined as an applied behavioural science which is created by the contributions from various behavioural disciplines. Therefore recently even organizations have started realising the fact and are becoming aware that their success is directly related with the highly effective use of human resources which is directly based upon behavioural sciences. In order to meet these challenges special skills as well as tools are required. Table 1.1 which is shown below presents a brief overview of the major contributions which behavioural sciences theories make towards organizational behavioural studies. The table 1.1 shown below clearly shows that how the organizational behaviour is linked with the behavioural science and how various behavioural sciences like psychology, sociology, social psychology, anthropology, and political science contribute words learning attitude, team management, organisation change, organisation culture,, organisational effectiveness, change management attitude change, group processes, comparative attitudes, cross-cultural analysis, conflict and power etc. This table shows that there exists a link between human behaviour in organizational settings, the organization, and the environment which surrounds the organization as well as the organization- the individual interface. It is seen that every individual or human resource brings a unique set of personal characteristics as well as background along with unique experiences to the organization. Therefore it is very vital to consider the employees which work for any organisation and manager should consider the unique perspective every employee brings into the work settings for the organization to be successful (Shajahan 2004). 8

9 Behavioural Science Contribution Unit of analysis Output PSYCHOLOGY Learning, attention, aptitude, motivation, personality, perception, Morale, leadership, job satisfaction, effectiveness, work design, work Individual Group Dynamics, Team Management SOCIOLOGY Formal organization theory, organizational technology, organisation change, organisation culture, organisational effectiveness Group Study of Organisation behaviour SOCIAL PSYCHOLOGY Change Management, Attitude Change, Communication, Group processes, Group decision making Organisati on system Comparative values, comparative attitudes, Cross cultural analysis ANTHROPOLOGY Organisational culture, Organisational environment POLITICAL SCIENCE Conflict, intra-organisational politics, Power Table 1.1: Towards an organisational behaviour discipline (Shajahan 2004) 9

10 5. Business complexities and challenges associated with managing and leading various stakeholders working in modern organisations Nokia, a Finland based telecommunications organization occupied top notch in the industry as it stretches the concept of teamwork far beyond just the technical definition of teamwork. In the company teams are kept at the focal point or core of the whole innovative management system which allows the employees to get directly involved in any project and also permits them to take part actively in decision making regardless of their positions in the corporate hierarchies as compared to its rivals which just follow lip service to the employee motivational tools. The CEO of The Company believes in the fact that in order to direct the growth and take lead empowerment of teams helps in achieving higher level of creativity and it also provides remarkable flexibility, providing a unique ability to the company to stay ahead of its competitors. Each and every aspect of operations at Nokia ranging from designing to manufacturing and engineering or sales is being exclusively assigned to the teams. Managing a diverse workforce of more than 60,000 employees spared across the globe is not an easy task. The people belong to diverse culture, background and disciplines, but they work in close conjunction to harness their diverse capabilities to provide better informed as well as effective decision making. The teams are being assigned the responsibilities to find out the right way of getting things done. Each team member is being provided with an opportunity to develop and go beyond the conventional business roles (Wagner & Hollenback 2002). To resolve the issues which are related to HR in Nokia due to reorganizations or downsizing, the company adopts successfully people management which is done through unique organizational culture, adopted a Finnish Model of industrial relations where multiple stakeholders have huge effect on the company which includes trade unions and the government also and particular technological environment also contributes towards achieving success in people management (Katou & Budhwar 2009). 10

11 6. Integration of organisational behaviour and management practice and their impact on organisational outcomes Nokia adopts a reverse approachh where first HRM is linked with performance and then HRM practices are developed, which are completely in line with strategic decision making as well as goal setting (Boselie et al. 2005). The human resource value chain starts with the performance of firm which can be seen in the firm s search for gaining competitive advantage as well as sustained competitivee advantage. This in turn will lead to finding out the critical success factors which will help in achieving success. These critical success factors are being specified in the form of critical as well as non-critical HR goals, which in turn get impacted the employee attitudes for example employee commitment and motivationn along with employees behaviour also. Finally these attitudes as well as behaviours of the employees can be impacted by the HRM. This humanh resource value chain can be visualised from the figure 2 shown below: Sustained competetive advantage Critical Success Factors Employee attitude and behaviour Human resource Practices determine competetive advantage determine sustained competetive advantage Find CSF which generate sustained advantage for eg productivity, innovation, flexibility etc. determine employee attitude and behvaiour find cognitive factors affecting CSF Determine HR practices which have positive impact on attitude and behaviour of employees like performanc e related pay PRP), performance management (PR) etc. Figure 2: A Reversed Approach for Creating HR Value Chain 11

12 There is a general thinking that human resource is a source of gaining competitive advantage, complex HR systems of practice help in increasing the inimitability of the system and the HR practices have most direct impact on the human capital of any organization (Delery & Shaw 2001). On every prominent theory related to adding value to human resource management is resource-based view (RBV) of any firm (Boselie et al 2005). The human resources are considered to be the most valuable assets of the organization and the resource based view is based upon three concepts of rare, value, non-suitability and inimitability. For example the Swedish IKEA is a true example of an organization which sports unique organizational culture which is inimitable. The same holds for BP and Shell whose products are difficult to imitate. Some of the best examples of RBV in practice are the Black & Decker Company which is world s largest manufacturer of home improvement products like drills, sanders etc. and it created sustained competitive advantage by building continuous innovation around the highly reliable and common electric motor. The VRIO Framework (Barney & Wright 1998) as based upon earlier literature comprises of value, rareness, inimitability as well as organization. This is the hierarchical framework which is used by successful organizations for determining the potential organizational success by utilising the internal resources at their best. The first level of the framework is mainly focussed on finding whether the resource is valuable or not. According to the VRIO framework guidelines all the internal resources which are of no value to the organization are source of competitive disadvantage. Whereas the valuable resources are capable of taking the firm to next level by creating temporary competitive advantage as well as above-average performance. When these internal resources become highly valuable, rare as well as difficult to imitate the company achieves highest level of performance. As per VRIO framework this can be achieved when an organization gets intensive organization support. It helps in creating sustained competitive advantage and also long term above average performance. It is possible for very few organizations to reach this highest level. Is a resource...? Valuable? Rare? Difficult to Supported by Competitive Performance imitate organization? Implications No - - Competitive Below average disadvantage Yes No - Competitive Parity Normal 12

13 Yes Yes No Temporary Competitive advantage Yes Yes Yes Sustained competitive advantage Figure 3: The VRIO Framework Above average Above average The VRIO framework links the performance to various major business processes of any organization and according to the framework as shown in figure 3 it is best to avoid the resources which do not have any economic value for The Company as they do not contribute towards the organizational performance. Currently it is better to outsource such resources to other firms so as to reduce costs and it also helps in focussing on various main business activities of the company. The RBV is mainly related with the other two levels of VRIO framework which are: creating competitive advantage (temporarily) as well as competitive advantage (sustained). According to the framework it is possible to create above-average performance if the organizational resources are rare, tough to imitate and valuable at the same time. These three qualities of resources will not create long term success or suitable competitive advantage without getting structural support from the company. Thus it can be said that sustained competitive advantage cannot be gained merely through creating resources which are rare, valuable and inimitable, it is also an outcome of the manner in which resources are acquired, managed, developed as well as supported by the organizational systems. The next step of creating a value chain for HRM is to link the idea of competitive advantage with the organizational performance. A very helpful and advantageous approach is being developed by Boxall and Purcell (2003), where they have linked competitive advantage with the ultimate organizational goals as well as organizational performance which is being depicted with the help of certain critical as well as non-critical HR goals like labour productivity and market share etc. This approach is very unique as in it we can find a strong link with HRM also. In this basic framework developed by Boxall and Purcell the critical HR goals are mainly focussed on three types which are desirable and the level of outputs also. These three desirable types of critical HR goals are: labour productivity or cost effectiveness, 13

14 organizational flexibility and lastly social legitimacy along with employment citizenship (Boxall & Purcell 2003). 6.1 HRM and Performance Considering the above factors it becomes imperative for Nokia to find out what kinds of employee attitudes as well as behaviour cast positive impact on organizational flexibility, cost effectiveness as well as social legitimacy of the organization. For example in many cases it is seen that highly motivated as well as committed employees are found to be highly productive as well as more flexible. Such employees show eagerness to learn various kinds of functions through the process of job rotation. On the other hand the employees who are less committed and show lower levels of employee motivation are less productive and flexible. There are empirical evidence which suggest that HRM has modest impact and that too in positive manner on the performance, while in some cases there is no impact at all ( Purcell 1999). Some researchers even suggest that the impact of even one standard deviation in an HR system is considered to be 10 to 20 percent of the market value of the organization (Becker & Becker 2000). While a meta analysis done on 92 empirical studies suggested that an increase in standard deviation while using special kind of HRM which is known as high performance work practices (HPWP) is related with or results in 4.6 percent enhancement or increment in the organization s return on assets (ROA) ( Combs et al. 2006). Therefore from the outcomes of all these researches it is clear that there is significant relationship between HRM and performance statistically as well as managerially also (Paauwe, 2007). Overall, the HR scholars generally believe that the HR practices are at least weakly connected with the performance of the organization (Wright & Gardener 2003; Paauwe & Boselie 2005). 6.2 Added Value of HRM There are much empirical evidence which suggest that there is significant relationship between HRM and organizational performance. It is found that HR Planning has positive relationship with the labour productivity (Koch & McGrath 1996). In the same way selective 14

15 recruitment as well as selection of fresh employees has positive impact on the labour productivity (Huselid 1995), while it has negative impact on employee turnover (Huselid 1995). Therefore one of the best practices of HRM is selective recruitment and selection. Even excellent rewards along with performance related pay (PRP) casts positive impact on product quality ( Kullberg & Moody 1994), customer satisfaction (Banker et al. 1996), labour productivity (Lazear 1996), employee motivation (Dowling & Richardson 1997), organizational commitment and employee trust (Appelbaum et al. 2000), while it is negatively connected with employee turnover (Arthur 1994). Therefore in contemporary HRM, PRP along with compensation is considered to be an important and key best practice. Training and development result in decreased turnover of employees, however it causes increased positive social environment amongst the managers employees which is called social climate and it also results in increased enhanced trust of the employee on the organization ( Applebaum et al. 2000). Therefore employee development along with creating opportunities for internal promotions causes positive impact on the employee commitment towards organization as well as enhanced job satisfaction. Therefore if we look back at the Nokia s HR issue of handling the employees during layoffs or downsizing, there are many HR practices which can cast positive impact on the employee attitude and behaviour. Nokia can successfully handle all the HR issues or rather organizational behaviour issues through the positive impact of HR practices like selective recruitment and selection of employees. Extensive training as well as development modules should be developed for the employees to keep them motivated. Nokia needs to focus on creating internal promotion as well as career opportunities in order to increase the level of job satisfaction and organizational commitment amongst the employees. Other HR practices which can be of great help in positively influencing the employees at Nokia especially during downsizing or restructuring are employee involvement, spreading good communication all through the company, information sharing and job autonomy principles. The best part is that these best HR Practices are inimitable therefore even the competitors would not be able to copy the success formula of Nokia. The potential competitive advantage of any organization mainly uses the concept of establishing ultimate business goals, critical HR goals, critical non-hr goals as well as HR outcomes. 15

16 6.3 Establishing HR Activities Although there are numerous reports which are full of excellent or best HR practices and ideas, implementation as well as perception of HRM is very important for the organization (Becker & Huselid 2006). Therefore the HR practices have been further divided into three types which are: Intended HR Practices (includes intended new HR practices and policies); Actual HR Practices (includes HR practices which are mainly implemented y the line managers) and Perceived HR Practices (covers the employees perceptions as well as experiences with HR practices which have been directly implemented by their immediate supervisors) (Wright & Nishii 2007). Perceived HR practices directly impact the HRM outcomes, therefore the line managers play very crucial rather critical role in the success of the HRM as they are the ones who implement the HR Practices. 7. Conclusion From the above research and discussion about the HR issue faced by Nokia it is evident that in order to create positive environment amongst employees due to downsizing or layoffs or restructuring they need to implement intended, actual as well as perceived HR practices really in practice. Nokia can plan to get a new 360 degree system for feedback which will help in monitoring as well as evaluating its employees. This 360-degree feedback system should be established by HR professionals, which will help in enhancing the business awareness amongst the Nokia employees. This would be reflected in increased customer focus of the employees, willingness to do as much hard work as needed and cost reduction too. This kind of HR practice if designed and developed at Nokia will help in linking performance management with its current corporate strategy, which in turn will help in creating more focussed efforts towards creating higher shareholder value through market shares, profits as well as sales. Top management support is also very crucial in such situations and the employees at Nokia will perceive all these HR practices in positive manner which will in turn positively impact the firm s performance in positive manner. Thus Nokia needs to create and HR value chain within the organization as per the RBV theory and VRIO 16

17 framework which should include the HR professionals along with line managers as well as employees. 17

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